Texas Judge Declares the Affordable Care Act Unconstitutional – What’s Next?

As reported in our “2018 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare,” the Tax Cuts and Jobs Act repealed the individual mandate, which spawned a lawsuit challenging the whole of the Affordable Care Act (“ACA”).  The lawsuit, filed in the Northern District of Texas in February 2018 by the Texas and Wisconsin Attorneys General, leading a 20-state coalition, alleged that because the repeal of the individual mandate “renders legally impossible the Supreme Court’s prior savings construction of the Affordable Care Act’s core provision – the individual mandate – the Court should hold that all of the ACA is unlawful and enjoin its operations.” The plaintiffs argued that not only is the individual mandate now unlawful, but also that this core provision is not severable from the rest of the ACA. Read More ›

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Zombie Benefits – Are Health Reimbursements Arrangements (“HRAs”) Back From the Dead?

The Affordable Care Act (“ACA”) has not been kind to health reimbursement arrangements (“HRAs”).  Many employers got rid of HRAs, or integrated them with a major medical plan, in order to avoid significant penalties under the ACA.  At one point it appeared that after-tax HRAs did not have to comply with the ACA.  However, as noted in our March 11, 2015 SW Benefits Blog, “IRS Issues More Guidance On Employers That Pay For Individual Health Insurance Policies for Employees – Gives Limited Relief to Small Employers,” the IRS clarified that even after-tax HRAs are also subject to the ACA rules.

The proposed regulations that were published in the Federal Register on October 29, 2018 breathe new life into HRAs.  Read More ›

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Count Down to Open Enrollment – Some Quick Thoughts

As open enrollment approaches for the 2019 calendar year, below are some items employers may want to consider:

  • Wellness program changes – Many employers change their wellness programs during open enrollment.  This is a reminder that even small changes to a wellness program may have significant consequences.  For example, if an employer increases wellness rewards, it may impact not only whether a program complies with the 30% test under HIPAA but it may also impact affordability under Code Section 4980H.  Making changes to a wellness program structure may also create problems.  For example, employers with tobacco surcharges might allow people to avoid surcharges by attesting that they do not use tobacco. 
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Association Health Plans – A New Frontier?

On June 21, 2018, the Department of Labor published the final association health plan (“AHP”) rule, which can be accessed at: https://www.gpo.gov/fdsys/pkg/FR-2018-06-21/pdf/2018-12992.pdf.  83 FR 28912 (June 21, 2018).  The final rule is short, just shy of three pages in length (see page 28961 to 29964), and provides that a bona fide group or association shall be deemed to be able to act in the interest of an employer within the meaning of section 3(5) of ERISA by satisfying the criteria set forth in the final rule.  The requirements are relatively straightforward and are summarized below:

  • Bona fide group or association of employers – There are eight requirements that must be met to satisfy this standard. 
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Health Plans – A Pain to Administer But Appreciated by Employees

Administering health plans is not the easiest task.  Such plans are subject to an alphabet soup of laws, including but not limited to ERISA, the Internal Revenue Code, COBRA, HIPAA, GINA, Mental Health Parity, the ADA, the ADEA, and Title VII.  However, a November 2017 American Benefits Council survey may make employers feel better about the time, energy, and resources they spend administering their health plans.

The November 2017 survey shows that employees prefer high quality benefit programs over additional pay by a nearly 2‑to‑1 margin.  This is surprising because many people assume “cash-is-king.”  The survey demonstrates otherwise and highlights how important employer-provided health benefits are to employees.  Read More ›

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Congress Kicks the Can Down the Road Again – Cadillac Tax On High Cost Employer Health Coverage Delayed to 2022

Section 4980I, which was added to the Internal Revenue Code by the Affordable Care Act, was originally supposed to take effect in 2018.  This tax is commonly called the “Cadillac tax” because it imposes a 40% excise tax on high cost employer sponsored health coverage.

The Consolidated Appropriations Act signed into law on December 18, 2015, delayed the effective date of the Cadillac tax to 2020.  And now, in the federal spending bill that was signed into law on January 22, 2018, Congress has again kicked the can down the road with another two-year delay to 2022.  This is welcome news for most employers.  Read More ›

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Making a List, Checking it Twice – 2017

It’s that time of year when boys and girls start making their lists for the holidays, but we in the employee benefits world make a very different kind of list.  In the rapidly changing world of employee benefits and executive compensation law, checklists can be particularly helpful to make sure important issues do not fall through the cracks.  Each year we publish health and welfare, cost-of-living, executive compensation, and qualified retirement plan checklists to help individuals stay apprised of changes in the law, changes that they might need to make to their employee benefits plans, and various notice requirements.  We just published the last of our annual checklists.  Read More ›

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Section 4980H Large Employer Penalties – IRS Signals the Health Coverage Penalties Remain in Force

Many employers were hopeful that the Code Section 4980H penalties would be repealed now that Republicans control Congress and Trump is in the White House.  To date, that has not happened, nor has the IRS announced it will not enforce these penalties.  In fact, in two Information Letters released by IRS on July 16, 2017, the IRS indicated that the ACA Executive Order signed by President Trump when he first took office “does not change the law; the legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.”

Senate Republicans are making one last ditch effort to repeal Code Section 4980H.  Read More ›

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Why Isn’t My “Free” Preventive Health Care Free?

In my opinion, one of the best changes made by the Affordable Care Act is the mandate that requires health plans to provide certain specified preventive services without imposing any cost sharing.  This is sometimes referred to as “free” preventive care.  As a result of this mandate, deductibles, copays, coinsurance, and other cost sharing may not be imposed on the specified preventive services if they are provided by an in-network provider. 

The thing that is so great about free preventive care is that it results in better health outcomes for employees and their families, while, at the same time, saving employers from paying larger health claims when illnesses are not diagnosed early.  Read More ›

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Curing What Ails You – Relief for Small Employer HRAs

The impact of the Affordable Care Act (“ACA”) on health reimbursement arrangements (“HRAs”) has not been favorable.  Many employers got rid of their HRAs or integrated them with a major medical plan in order to avoid significant penalties under ACA.  These rules imposed a significant burden on small employers, because many small employers used HRAs to reimburse employees for the cost of individual health insurance policies they purchased rather than sponsor a group health plan.

In IRS Notice 2015-17, Q&A1, the IRS granted limited relief for small employer HRAs through June 30, 2015.  However, at the end of last year, small employers received greater relief in the form of the 21st Century Cures Act (the “Cures Act”). Read More ›

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